(a) “at or about the same time” means within ninety days
prior to the importation or within ninety days after the importation of goods being
valued;

(b) “buying commissions” means fee paid and declared in the
bill of entry by an importer to his agent for the service of representing the importer
abroad in the purchase of the goods being valued;

(c) “commercial level” means the level of the transaction
at which a sale is concluded and includes the sales before and after importation
of the goods for example, sales conducted between a manufacturer and a wholesaler,
or between a wholesaler and a retailer, or between a retailer and a customer;

(c) “family” means a group of persons related to each other
by marriage, blood or law or adoption and includes all descendants of a common progenitor;

(d) “general expenses” includes direct and indirect costs
of marketing the goods after importation;

(f) “produced” includes goods grown, manufactured and mined;
and

SUB-CHAPTER
II

GENERAL

108.
Declaration by the importer.-The
importer, or his agent, shall furnish --

(a) a declaration disclosing full and accurate details relating
to the value of imported goods; and

(b) any other statement, information or document as considered
necessary by the appropriate officer for determination of the value of imported
goods under the Act and this chapter.

109.
Burden of proof.- (1) Where
the appropriate officer has reason to doubt the truth or accuracy of the particulars
or of documents produced in support of the declaration, such officer may ask the
importer to provide further explanation, including documents or other evidence.

(2) If, after receiving information referred to in sub rule
(1) or in the absence of a response, the appropriate officer still has reasonable
doubts about the truth or accuracy of the declared value, it may be deemed that
the customs value of the imported goods cannot be determined under the provisions
of sub-section (1) of section 25 of the Act.

(3) When a final decision is made, the appropriate officer
shall communicate to the importer in writing his decision and the grounds therefore.

110.
Prohibited methods.-Where
the value of imported goods cannot be determined under subsection (1), (5), (6),
(7) and (8) of section 25 of the Act, the customs value shall be determined on the
basis of data of imports available with the Customs Department. However no value
shall be determined under this

chapter on the basis of --

(i) the selling price of the identical goods produced in
Pakistan
;

(ii) the price of the goods in the domestic market of the
country of origin except after allowing deduction of local taxes and profits at
each level of sale in the country or exportations;

(iii) arbitrary or fictitious values; or

(iv) the minimum customs values, except those notified under sub-section
(4) of section 25 of the Act.

111.
Rights of Customs.- Nothing
contained in this chapter shall be construed as restricting, or calling in question,
the right of the appropriate officer to satisfy himself as to the truth or accuracy
of any statement, information, document or declaration presented for valuation purposes
by or on behalf of the importer under the Act and rules made thereunder.

112.
Rights of importer.-(1)
Whenever the appropriate officer is unable to accept the transaction value without
further inquiry, he shall give the importer an opportunity to supply such further
detailed information as may be necessary to enable him to examine the circumstances
surrounding the sale. In this context, the appropriate officer of customs shall
examine relevant aspects of the transaction, including the way in which the buyer
and seller organize their commercial relations and the way in which the price in
question was arrived at, in order to determine whether the relationship influenced
the price. Where it can be shown that the buyer and seller, although “related persons”
as defined under clause (g) of rule 2 of chapter- I, buy from and sell to each other
as if they were not related, this would demonstrate that the price had been settled
in a manner consistent with the normal pricing practice of the concerned industry
or with the way the seller settles prices for sales to buyers who are not related
to him, this would demonstrate that the price has not been influenced by the relationship.

(2) Where it is shown that the price is adequate to ensure
recovery of all costs plus a profit which is representative of the firm's overall
profit realized over a representative period of time, for example, on an annual
basis, in sales of goods of the same class or kind, this would demonstrate that
the price had not been influenced.

SUB-CHAPTER
III

PRIMARY
METHOD OF VALUATION

113.
Price actually paid or payable.-
(1) The price actually paid or payable is the total payment made or to be made by
the buyer to or for the benefit of the seller for the imported goods. The payment
need not necessarily take the form of a transfer of money. It may be made by way
of letter of credit or negotiable instruments, or by cash or credit or partly by
cash and partly by credit and may be made directly or indirectly. As example of
an indirect payment would be the settlement by the buyer, whether in whole or in
part, of a debt owned by the seller.

(2) Activities undertaken by the buyer on his own account,
other than those for which an adjustment is provided in sub-section (2) of section
25 of the Act are not considered to be an indirect payment to the seller, even though
they might be regarded as of benefit to the seller. The costs of such activities
shall not, therefore, be added to the price actually paid or payable in determining
the value of imported goods.

(3) The customs value of imported goods shall not include
the following charges or costs, provided that they are distinguished from the price
actually paid or payable for the imported goods, namely:-

(i) charges for construction, erection, assembly, maintenance
or technical assistance undertaken after importation of goods such as industrial
plant, machinery or equipment;

(ii) the cost of transport after importation; and

(iii) duties and taxes in
Pakistan
.

(4) The price actually paid or payable refers to the price
of the imported goods. Thus the flow of dividends or other payments from the buyer
to the seller, which do not relate to the imported goods,, shall not be part of
the customs value.

114.
Restrictions which do not affect
value.- Among restrictions which would not render a price actually paid or payable
unacceptable are restrictions which do not substantially affect the value of the
goods. An example of such restrictions would be the case where a seller requires
a buyer of automobiles not to sell or exhibit them prior to a fixed date which represents
the beginning of a model year.

115.
Restrictions which affect value.-
If the sale or price is subject to some conditions or considerations for which a
value cannot be determined with respect to the goods being valued, the transaction
value shall not be acceptable for customs purposes. For examples:-

(a) the seller establishes the price of the imported goods
on condition that the buyer will also buy other goods in specified quantities;

(b) the price of the imported goods is dependent upon the
price, or prices, at which the buyer of the imported goods sells other goods to
the seller of the imported goods; or

(c) the price is established on the basis of a form of payment
extraneous to the imported goods, such as where the imported goods are semi-finished
goods which have been provided by the seller on condition that he will receive a
specified quantity of the finished goods.

Explanation.-
Conditions or considerations relating to the production or marketing of the imported
goods shall not result in rejection of the transaction value. For example, the fact
that the buyer furnishes the seller with engineering and plans undertaken in
Pakistan
shall not result in rejection of the transaction value. Likewise, if the buyer undertakes
on his own account, even though by agreement with the seller, activities relating
to the marketing of the imported goods, the value of these activities shall not
be part of the value of imported goods nor shall such activities result in rejection
of the transaction value.

116.
Transaction value acceptable
in case of related parties.- Where the buyer and seller are related, circumstances
surrounding the sale shall be examined and the transaction value shall be accepted
as the customs value of imported goods provided that the relationship did not influence
the price. Where the appropriate officer has no doubts about the acceptability of
the price, it may be accepted without requesting further information from the importer.
For example, the appropriate officer may have previously examined the relationship,
or he may already have detailed information concerning the buyer and the seller,
and may already be satisfied from such examination or information that the relationship
did not influence the price.

SUB-CHAPTER
IV

SECONDARY
METHODS OF VALUATION

117.
Transaction value of identical
goods.-(1) In applying sub-section (5) of section 25 of the Act, the appropriate
officer shall, wherever possible use a sale of identical goods at the same commercial
level and in substantially the same quantities as the goods being valued. Where
no such sale is found, a sale of identical goods that takes place under any one
of the following conditions may be used, namely:-

(i) a sale at the same commercial level but in different
quantities;

(ii) a sale at different commercial level but in substantially
the same quantities; or

(iii) a sale at a different commercial level and in different quantities.

(2) Having found a sale under any one of the conditions referred
to in sub-rule (1), adjustments shall then be made, as the case may be, for the
following, namely:-

(i) quantity factors only;

(ii) commercial level factors only; or

(iii) both commercial level and quantity factors.

(3) For the purposes of sub-section (5) of section 25 of
the Act, the transaction value of identical imported goods means a value, adjusted
as provided for in clauses (a), (b) and (c) of sub-section (5) of that section,
which has already been accepted under sub-section (1) of the said section 25.

(4) A condition for adjustment because of different commercial
levels or different quantities shall be that such adjustment, whether it leads to
an increase or a decrease in the value, be made only on the basis of demonstrated
evidence that clearly establishes the reasonableness and accuracy of the adjustment,
e.g., valid price lists containing prices referring to different levels or different
quantities. As an example of this, if the imported goods being valued consist of
a shipment of ten units and the only identical goods for which a transaction value
exists involved a sale of five hundred units, and it is recognized that the seller
grants quantity discounts, the required adjustment may be accomplished by resorting
to the seller's price list and using that price applicable to a sale of ten units.
This does not require that a sale had to have been made in quantities of ten as
long as the price list has been established as being bona fide through sales at
other quantities.

118.
Transaction value of similar
goods.-(1) In applying sub-section (6) of section 25 of the Act the appropriate
officer shall, wherever possible, use a sale of similar goods at the same commercial
level and in substantially the same quantities as the goods big valued. For the
purposes of sub-section (6) of the said section the transaction value of similar
imported goods means the value of imported goods, adjusted as provided for in sub-section
(2) thereof which has already been accepted under sub-section (1) of that section.

(2) The provisions of Rule-117 shall, mutatis mutandis, also
apply in respect of similar goods.

119.
Deductive value method.-(1)
For the purposes of this rule, the expression "unit price at which goods are sold
in the greatest aggregate quantity" means the price at which the greatest number
of units is sold in sales to persons who are not related to the persons from whom
they buy such goods at the first commercial level after importation at which such
sale takes place.

Explanation.-
(i) When goods are sold on the basis of a printed or advertised price list which
grants favourable unit prices for purchase made in larger quantities, the unit price
at which goods are sold in the greatest aggregate quantity shall be ascertained
as per the following example:-

Sale
quantity

Unit price

Number of sales

Total quantity sold at each price

One to ten units

100

10 sales of5 units 5 sales of 3 units

65

Eleven to twenty five units

95

5 sales of 11 units

55

Over twenty five

90

1 sale of 30 units

80

. units

1 sale of 50 units

Note.-(i) In this example, the greatest number
of units sold at a price is eighty, therefore, the unit price in the greatest aggregate
quantity is ninety.

(ii) In case when there are two separate sales. For example,
in the first sale five hundred units are sold at a price of ninety five currency
units each. In the second sale four hundred units are sold at a price of ninety
currency units each. In this example, as the greatest number of units sold at a
particular price is five hundred, therefore, the unit price of the greatest aggregate
quantity shall be ninety-five.

(iii) In case where various quantities are sold at various prices.
For example:-

(1)
Sales:

Sales
Quantity
Unit Price.

(1)
(2)

40 units
100

30 units
90

15 units
100

50 units
95

25 units
105

35 units
90

05 units
100

Total
quantity sold. Unit price.

(1)
(2)

65 90

50 95

60 100

25 105

Note.
In this example, the greatest number of units sold at a particular price is sixty-five,
therefore, the unit price in this greatest quantity is ninety.

(2) Any sale in Pakistan, as provide in sub-rule (1), to
a person who supplies directly or indirectly free of charge or at reduced cost for
use in connection with the production and sale for export of the imported goods
any of the elements specified in clause (c) of sub-rule (2) of section 25 of the
Act shall not be taken into account in establishing the unit price for the purposes
of sub-section (7) of section 25 of the Act.

(3) For the purposes of the rules, the phrase "profit and
general expenses" as used in sub-clause (i) of Clause (a) of sub-section (7) of
section 25 of the Act, shall be taken as a whole for the purpose of determination
of value. The figure for the purposes of this deduction shall be determined on the
basis of information supplied by or on behalf of, the importer unless his figures
are inconsistent with those obtained in sales in
Pakistan
, of the same class or kind of goods. Where the importer's figures are inconsistent
with such figures, the amount for profit and general expenses may be based upon
relevant information other than that

supplied by, or on behalf of, the importer.

(4) Local taxes payable by reason of the sale of the goods
for which a deduction is not made under sub-clause (iv) of clause (a) of sub-section
(7) of section 25 of the Act shall be deducted under sub-clause (i) of clause (a)
of that sub-section.

(5) In determining either the commissions of the usual profits
and general expenses under clause (a) of sub-section (7) of section 25 of the Act,
the question whether certain goods are "of the same class or kind" as other goods
must be determined on case to cases basis by reference to the circumstances involved.
Sales in
Pakistan
of the narrowest group or range of imported goods of the same class or kind, which
includes the goods being valued, for which necessary information can be provided,
should be examined. For the purposes of sub-section (7) of section 25 of the Act"
goods of the same class or kind includes goods imported from the same country as
the goods being valued as well as goods imported from other countries.

(6) For the purpose of clause (b) of sub-section (7) of section
25 of the Act, the "earliest date" shall be the date by which sales of the imported
goods or of identical or similar goods are made in sufficient quantity at the established
unit price.

(7) Wherever the method of Valuation provided in clause (c)
of sub-section (7) of section 25 of the Act is used, deductions made for the value
added by further processing shall be based on objective and quantifiable data relating
tot he cost of such work. Accepted industry formulas, recipes, methods of construction,
and other industry practices would form the basis of the calculations.

(8) The method of valuation provided in clause (c) of sub-section
(7) of section 25 of the Act shall normally not be applicable when, as a result
of the further processing, the imported goods lose their identity. However, there
can be instances where, although the identity of the imported goods is lost, the
value

added by the processing can be determined
accurately without reasonable difficulty. On the other hand, there can also be instances
where the imported goods maintain their identity but form such a minor element in
the

goods sold in
Pakistan
that the use of this valuation method would be unjustified. Accordingly, each situation
of this type must be considered on a case to case basis.

120.
Computed value method.-(1)
As a general rule, customs-value shall be determined under sub-section (8) of section
25 of the Act on the basis of information readily available in
Pakistan
. In order to determine a computed value, however, it may be necessary to examine
the costs of producing the goods being valued and other information which has to
be obtained from the country of manufacture.

(2) For the purposes of this chapter, "cost or value" referred
to in clause (a) of sub-section (8) of section 25 of the Act shall be determined
on the basis of information relating to the production of the goods being valued
supplied by, or on behalf of, the producer. It shall be based on the commercial
accounts of the

producer, provided that such accounts are
consistent with the generally accepted accounting principles applied in the country
where the goods are produced. The "cost of value" shall include the cost of elements
specified in sub-clauses (ii) and (iii) clause (b) of sub-section (2) of section
25 of the Act. It shall also include the value, apportioned as appropriate under
rule 122 of any element specified in clause (c) of sub-section (2) of section 25
of the Act which has been supplied directly or indirectly by the buyer for the use
in connection with production of the imported goods. The value of the elements specified
in sub-clause (iv) of clause (b) of subsection (2) of section 25 of the Act which
are undertaken in Pakistan shall be included only to the extent that such elements
are charged to the producer and no cost or value of the elements referred to in
this sub-section shall be counted twice in determining the computed value.

(3) For the purposes of this chapter, the "amount for profit
and general expenses" referred to clause (b) of sub-section (8) of section 25 of
the Act shall be determined on the basis of information supplied by or on behalf
of the producer unless the producer's figures are inconsistent with those usually
reflected in

sales of goods of the same class or kind
as the goods being valued which are made by producers in the country of manufacture
for export to
Pakistan
.

(4) For the purposes of this chapter, the "amount for profit
and general expenses" referred to in clause (b) of sub-section (8) of section 25
of the Act shall be taken as a whole. If producer's profit figure is low and the
producer's general expenses are high, the producer's profit and general expenses,
taken together, shall nevertheless be consistent with that usually reflected in
sales of goods of the same class or kind. Where the producer can demonstrate a low
profit on sales of the imported goods because of particular commercial circumstances,
the producer's actual profit figures should be taken into account provided that
the producer has

valid commercial reasons to justify them
and the producer's pricing policy reflects usual pricing policies in the branch
of industry concerned. Where the producer's own figures for profit and general expenses
are not consistent with those usually reflected in sales of goods of the same class
or kind as the goods being valued

which are made by the producers in the country
of manufacture for export to
Pakistan
, the amount for profit and general expenses may be based upon relevant information
other than that supplied by, or on behalf of, the producer of the goods.

(5) Where information other than that supplied by, or on
behalf of the producer is used for the purposes of determining a computed value,
the appropriate officer shall inform the importer, if the latter so requests, of
the source of such information, the data used and the calculation based upon such
data, subject to

the provisions of rule 124.

(6) For the purposes of this chapter, the "general expenses"
referred to in clause (b) of subsection (8) of section 25 of the Act, include the
direct and indirect costs of producing and selling the goods for export which are
not included under clause (a) of that sub-section.

(7) For the purposes of
clause (b) of sub-section (8) of section 25 of the Act whether certain goods are
"of the same class or kind" as other goods, must be determined on a case to case
basis with reference to the circumstances involved. In determining the usual profits
and general expenses under subsection

(8) of section 25 of the Act sales for export to
Pakistan
of the narrowest group or range of goods, which includes the goods being valued,
for which the necessary information can be provided, shall be examined. For the
purposes of sub-section (8) of section 25 "goods of the same class or kind" must
be from the same country

as the goods being valued.

121.
Fall back method.-(1) Value
of imported goods determined under sub-section (9) of section 25 of the Act, shall,
to the greatest extent possible be based on previously determined customs values
of identical goods assessed within ninety days.

(2) The methods of valuation, to be employed under sub-section
(9) of section 25 of the Act may be inclusive of those laid down in sub-sections
(1), (5), (6), (7) and (8) of the said section, but a reasonable flexibility in
the application of such methods would be in conformity with the aims and provisions
of subsection (9) of that section.

Explanation.-
Some examples of reasonable flexibility are as follows, namely:-

(i) Identical goods --

(a) the requirement that the identical goods shall be imported
at or about the same time as the goods being valued, could be flexibly interpreted;

(b) identical imported goods produced in a country other
than the country of exportation of the goods being valued could be the basis for
customs valuation; and

(a) the requirement that the similar goods shall be imported
at or about the same time as the goods being valued could be flexibly interpreted;

(b) similar imported goods produced in a country other than
the country of exportation of the goods being valued could be the basis for customs
valuation; and

(c) customs-values of similar imported goods already determined
under sub-sections

(7) and (8) of section 25 of the Act could
be used.

(iii) Deductive method --

The requirement that the goods shall have
been sold in the "condition as imported" as

provided in clause (a) of sub-section (7)
of section 25 of the Act could be flexibly interpreted, and the ninety days requirement
could be administered flexibly.

122.
Adjustment of value.- (1) For adjustment of value there shall be two factors
involved in the apportionment of the elements as specified in clause (c) of sub-section
(2) of section 25 of the Act to the imported goods, namely:-

(i) the value of the element itself, and

(ii) the way in which that value is to be apportioned to the
imported goods. The

apportionment of these elements shall be
made in a reasonable manner appropriate to the circumstances and in accordance with
generally accepted accounting principles.

(2) The value of the elements shall
be adjusted as follows, namely:-

(i) if the importer acquired the element from a seller not
related to him at a given cost, the value of the element is that cost;

(ii) if the element was produced by the importer or by a person
related to him, its value shall be the cost of producing it; and

(iii) if the element had been previously used by the importer, regardless
of whether it

had been acquired or produced by such importer,
the original cost of acquisition or production would have to be adjusted downward
to select its use in order to arrive at the value of the element.

(3) Once a value has been determined for the element, it
shall be apportioned to the value of the imported goods, as follows, namely:-

(i) the value might be apportioned to the first shipment
if the importer wishes to pay

duty on the entire value at one time;

(ii) the importer may request that the value be apportioned
over the number of units

produced up to the time of the first shipment;
or

(iii) the importer may request that the value be apportioned over
the entire anticipated

production where contract or firm commitments
exist for that production.

Explanation.-
If an importer provides the producer with a mould to be used in the production of
the imported goods and contracts with him to buy ten thousand units. By the time
of arrival of the first shipment of one thousand units, the producer has already
produced four thousand units. The importer may request the appropriate officer to
apportion the value of the mould over one thousand units, four thousand units or
ten

thousand units.

(4) Addition for the elements specified in sub-clause (iv)
of clause (c) of sub-section (2) of section 25 of the Act shall be based on objective
and quantifiable data. In order to minimize the burden for both the importer and
appropriate officer in determining the values to be added, data readily available
in the buyer's commercial record should be used in so far as possible.

(5) For those elements supplied by the buyer which were purchased
or leased by the buyer, the addition shall be made for the cost of the purchase
or the lease. No addition shall be made for those elements available in the public
domain, other than the cost of obtaining copies of them.

(6) Payments made by the importer for the right to distribute
or resell the imported goods shall not be added to the price actually paid or payable
for the imported goods if such payments are not a condition of the sale for export
of the goods to
Pakistan
.

(7) Where objective and quantifiable data do not exist with
regard to the additions required to be made under clauses (b), (c), (d) and (e)
of sub-section (2) of section 25 of the Act the transaction value cannot be determined
under the provisions of sub-section (1) of section 25. As an illustration of this,
a royalty is paid on the basis of the price in a sale in
Pakistan
of a liter of a particular product that was imported by weight in kilograms and
made up into a solution after importation. If the royalty is based partially on
the imported goods and partially on other factors which have nothing to do with
the imported goods, (such as when the imported goods are mixed with domestic ingredients
and are no longer separately identifiable, or when the royalty cannot be distinguished
form special financial arrangements between the buyer and the seller), it would
be inappropriate to attempt to make an addition for the royalty. However, if the
amount of this royalty is based only on the imported goods and can be readily quantified,
an addition to the price actually paid or payable can be made.

SUB-CHAPTER
V

MISCELLANEOUS

123.
Use of generally accepted accounting principles.- For the purposes of this chapter,
the expression "generally accepted accounting principles" refers to the recognized
consensus or substantial authoritative support within Pakistan at a particular time
with regard to the following, namely:-

(i) as to which economic resources and obligations should
be recorded as assets and liabilities;

(ii) which changes in assets and liabilities should be recorded;

(iii) how the assets and liabilities and changes in them should be
measured;

(iv) what information should be disclosed and how it should be disclosed;
and

(v) which financial statements should be prepared.

124.
Confidentiality.- All information which is by nature confidential or which is
provided on a confidential basis for the purposes of customs valuation shall be
treated as strictly confidential by the authorities concerned who shall not disclose
it without the specific permission of the person or government providing such information,
except to the extent that it may be required to be disclosed in the context of judicial
proceedings.

125.
Dispute settlement.-(1) In case of dispute between the importer and the appropriate
officer in respect of the value of the goods being valued, the same shall be resolved
in consistence with the relevant provisions of the Customs Act, 1969 (IV of 1969).

(2) Nothing contained in this Chapter shall
bar the claim of the importer for provisional release of goods under the section
81 of the Act or claim of the customs to assess the goods under the section 80 of
the Act read with section 25 thereof.